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Japan: Kan Targets Tax Reform to Repair Economy
Source: search.japantimes.co.jp
Source Date: Saturday, June 12, 2010
Focus: Electronic and Mobile Government
Country: Japan
Created: Jun 21, 2010

Stressing the need for tax reform to restore the country's battered finances, Prime Minister Naoto Kan vowed Friday in his first policy speech to the Diet that he will exert strong leadership to overcome Japan's economic struggles. Specifically, Kan called on opposition parties to jointly launch a panel to discuss ways to restore the fiscal balance. Kan did not specifically touch on the consumption tax, although he has indicated raising the unpopular levy will be inevitable to overcome the country's snowballing public debt and ballooning social security costs.

"As we can see in the confusion of the euro zone that was triggered by Greece, government finances could collapse if we leave the increasing public debt untouched and lose the trust of (the Japanese government bond) market," he said. "We need national discussion on this issue, which will determine the future of our country, by overcoming the barrier between ruling and opposition parties," Kan said. Kan, who took over from Yukio Hatoyama as prime minister on Tuesday after replacing him last week as Democratic Party of Japan president, criticized the lack of leadership by his predecessors, saying it ultimately resulted in the economy's downward spiral and stagnation.

"In order for the public to regain hope for the future, I will conduct a comprehensive reconstruction of Japan's economy, finances and social welfare," Kan told the Diet, which will likely end its session next week. Kan, the finance minister in Hatoyama's administration, focused much of his speech on the deteriorating fiscal balance and his ideas for fixing it. Japan "has a huge outstanding debt and it won't be cured in a short span of time," he acknowledged. But he assured that his approach to overcome the difficult task will be multidimensional, including creating jobs related to environmental protection and the aging society, as well as exporting Japan's technologies and experience to Asia's growing economies. The government must rid itself of policies that depend on public works to stimulate the economy and also end its reliance on government bonds to make ends meet, he added.

He meanwhile pledged to continue some of Hatoyama's policies, including reviewing wasteful spending by the government and taking the policy initiative away from bureaucrats. "We are still only halfway there," Kan said. On opening up the government to the public, Kan spoke of his experience in 1996 as health minister, when he revealed secret documents regarding HIV-tainted blood products that had been hidden by ministry officials. Referring to the disclosure of documents earlier this year regarding secret nuclear pacts between Tokyo and Washington, he said his new administration will continue to do away with politics behind closed doors and truly allow the public to take part in the nation's democracy. On foreign affairs, Kan said his team will work to establish stronger ties with both Washington and Asian neighbors, saying his Cabinet will formulate responsible diplomatic policies with the rest of the world.

"The U.S.-Japan alliance is the basis of diplomacy" for Japan, Kan said, explaining that the bilateral relationship not only provides security for the country but supports the peace and prosperity of the whole Asia-Pacific region. Regarding U.S. Marine Corps Air Station Futenma in Okinawa, Kan said he will abide by the agreement reached last month to relocate its operations within the prefecture. But he added that measures to alleviate Okinawa's hardships will be thoroughly studied. During the speech, Kan revealed he will visit Okinawa on June 23 and attend a ceremony to mark the 65th anniversary of the Battle of Okinawa. Continuing Hatoyama's diplomatic proposals, Kan said he will seek to create an East Asian community, as suggested by his predecessor, and vowed to create a strategic partnership with China and fortify ties with South Korea.

But Kan also highlighted his differences from Hatoyama and recent Liberal Democratic Party chiefs who come from hereditary backgrounds. A former social activist who began politics at the grassroots level, Kan said he gained interest in politics after watching his father struggle financially as a white-collar worker. His goal as a politician is to create a government that allows the wider public to truly get involved in politics and running the country, he said.
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